Disruptively building a better business within the Networked Society; concrete cases

Economists, Strategists, Visionaries are calling for redefining the 21^st century capitalism; capitalism that reinvents societal ties; capitalism that no longer divides, exploits and sheds societal disasters wherever it surges. The open-ended consumption model we have today is no longer sustainable. Fortunately the change has already started; let me introduce you cases from this new-disruptive-better-business-era.

Case 1:
India is the second largest country in the world in terms of population. India has also a large number of villages; more than 600.000 villages with poor transport infrastructure making movement of goods and people extremely difficult.

Retinopathy of Prematurity (ROP) is the leading cause of preventable infant blindness worldwide. India has the largest concentration of blind people in the world, 1 out of 3. Over 8% of 27 million births each year are at risk of this potentially blinding condition. The ratio of inhabitants to ophthalmologist is around 100,000:1. There's no way the number of qualified physicians will grow to match the need anytime soon. The challenge is to screen 250.000 infants a day. This problem requires a fast and efficient solution for screening infants especially in the rural areas where expertise is lacking.

The widespread availability of mobile networks and the steady growth of Mobile broadband are opening unexpected doors for fast, efficient and societal innovations. Mobile broadband technology provides the possibility to transport data securely, conveniently, faster and while traveling.

i2itelesolutions pics

A potential solution has been tested. The Postgraduate Institute of Ophthalmology has partnered with a software company i2i TeleSolutions in Bangalore, and developed the solution. The solution consists of the availability of a portable retinal camera with an image capture design suited for newborns. This camera allows technicians to capture images and upload them via a Mobile broadband dongle data card. The images and data are uploaded to a remote server. Once uploaded the images can be accessed and viewed by an ophthalmologist - who could be thousands miles away - using an Iphone, an Ipad or any other PC.
Feedback and corrective measures can then be provided back to the technician via the secure server.This scale of screening in such large numbers can only be possible using Mobile Broadband networks.

Case 2:

In France since July 1, it is mandatory to have a breathalyzer (Alcohol tester) in his car. Car drivers have the choice between two alternatives: the disposable one of 2 euros or an electronic device priced more than 100 euros now. It will be much cheaper with larger sales volumes.

AndroMC Systems has worked on a solution associated with a smartphone, which is widely used in France. This company has developed a breathalyzer that plugs into a smartphone, and is associated with an application.

The principle is simple: you plug the reusable housing on the charging port and blow in it and the app indicates whether you are fit to drive. If not, the app may even find another means of transportation in the neighborhood, or call a cab for you. When possible the app can even block the car starter!

The combination of smartphone and Mobile broadband connectivity is becoming a driver of new business innovations, that will lead to economic growth, social empowerment and without any doubt to many surprising disruptions.

Do you imagine the social value of these services? Their business case is sustainable and more than positive.

Apple, Facebook, Google common love: the "double Irish with Dutch sandwich"

Do you know what is "double Irish with Dutch sandwich"? No, it's not a special cheeseburger.
Many people don't know what it is. Well. The ones with no accounting & financial knowledge...

It's an accounting technique known as the “double Irish with a Dutch sandwich” which reduces taxes by routing profits through Irish subsidiaries, the Netherlands and to the Caribbean. Today, it is used by hundreds of other corporations. Apple was pioneering in developing this tactic in order to avoid paying tax in high tax rate countries. What do Apple , Amazon , Facebook and Google have in common? The love of the "double Irish sandwich Dutch." Technology giants hide tax using these sophisticated systems, while brewing billions of euros of turnover in these countries.

Corporations that implement this tactic have one thing in mind: maximize profits where taxation is low and have a very low turnover where the tax rate is higher! Check this one, many of these corporations have subsidiaries registered in the Netherlands where the tax rate is 5%, subsidiaries in Ireland where the tax rate is 12.5% and subsidiaries in Bermuda where tax rate is about 5%; compared to the UK tax rate of 24% or France 33%.
These technology giants use the transfer pricing method. This method allows corporations to move sales between subsidiaries. From subsidiaries to parent company that is based in a tax heaven!! Got it?!
As an example, Amazon who is headquartered in Luxembourg, paid in the UK 2.3 million in taxes for a turnover of nearly 260 million euros in 2011. Facebook is accused to have deliberately created a net loss to avoid UK tax. Apple has paid 6.2 million euros in taxes in the UK, only 7.2% of its turnover in the country. Apple paid less than 2% tax on overseas profits last year, just $713 million in overseas corporation tax on profits of $36.87 billion. As a result: the parent company (based in a tax heaven) gets the largest profits while the subsidiary generates virtually nothing. And this is completely legal!
Governments in Europe, particularly in France and the UK where most of the profits are made for these companies, have started investigating and complaining about these practices.

My first question to the Apple, Amazon, facebook & others: Why on earth don't you want to pay tax in the country where you're making the largest profits? I know your answer: It is capitalism. This is business. greedy-sleazy-shabby-cruel business. The simple holy act of profit maximization is the only raison d'etre of these giants.

As I mentioned earlier, this is totally legal, but I put a question mark on whether it is totally ethical as well.
Tax collection is the only revenue source of governments to support healthcare, education, nutrition of their folks. These folks are the ones who are consuming your products, buying your services and making sure that you are generating high profits for your business. Refusing to fairly pay your real tax in Spain, Italy, Greece, France, etc... is a cynical and disgraceful stand, particularly in these uncertain times.

My second question:, remind me: what societal value are these giants really creating? what is their contribution to the society? to healthcare? nutrition? water problems? poverty? oh yes I forgot, Apple is employing Chinese for $2 a day. What a great societal contribution!

I really believe that these business practices must change. Businesses should generate profits for shareholders and must contribute in creating societal value as well. We cannot continue with this open-ended consumption model, where the simple act of profit maximization is good in itself.

The world is changing, and the business practices must change as well!

Welcome to the Disruption Era! 23 BUSD of lost revenues for Telcos in 2012 because of free SMS

Prof. Clayton Christensen Disruption Model

23 BUSD loss
Free messaging on smartphone, like Whatsapp, cost Telcos companies worldwide in 2012, 23 Billions US dollar on missed SMS-revenues, according to Ovum, in a recent report published in October 2012.

In the Ovum report, it is expected that losses could reach 54 BUSD per year by 2016.

What Telecom operators must do now? what are their choices? their options? their strategies? 
First, Telcos should start understanding, much better than they are doing, the influence of social applications on the consumers behavior. Secondly, start offering services that address these new consumers trends and behaviors.
In Ovum report, it is clearly observed that an increasing number of companies are using more and more social messaging services. This does not seem to be a short term trend but a complete shift in communication pattern.
In 2009, SMS provided 57 percent of 'non-voice' revenues to Telcos. In year 2012 this percentage will go down to 47 percent.

Once again the 'Free' business model has prevailed. So what is exactly Whatsapp business model?

From Philanthropy to CSR to Creating Shared Value...

There is an ever growing awareness about social challenges for which governments and NGO's lack sufficient capabilities to fully meet them. At the same time, Companies or Businesses are perceived to be prospering at the expense of the broader communities despite increasing CSR activities.

Harvard Professor Michael E. Porter and Mark Kramer came up, in the 2011 McKinsey award winner HBR article, with the concept of Creating Shared Value. Let's have a close look what this is all about. What is the role of companies in communities and how is it evolving?

Prof. Michael Porter's evolution model

It started with Philanthropy

It's harder and harder to do pro-public business activities because supporting business is viewed as a questionable activity. Business has been trying to address these issues with philanthropy. In fact, the first response to business to these societal issues is philanthropy.

Twenty years ago was the question to corporate/companies of "what percentage of your profit do you give to support society? In India they have even passed a law on this with a strong recommendation that businesses should give 2% of their profit to philanthropy, if they don't, they have to say why.
Philanthropy is good. A place to start but philanthropy is not enough... simply because there is not enough money!

The next step is Corporate Social Responsibility (CSR)
CSR is more than just philanthropy, but it includes philanthropy; compliance, understanding the communities standards, citizenship, being a good corporate citizen, and "sustainability" which means a lot of different things that it's hard to define sometimes. It's clear about environmental sustainability but less clear about a broader sustainability. Many corporates have many CSR activities but they do it to be considered a good corporate citizen only.

The next step is Creating Shared Value (CSV)
The more we learn about poverty, healthcare, water, nutrition, about societal issues, the more we see opportunities to use economics or new business models to address these societal issues. Shared value is about creating new markets, new opportunities for growth, and new ways to improve productivity. With CSV, opportunities for disruptive innovations will proliferate. Capturing  these opportunities will require new thinking about market segmentation, customer segmentation,  supply chain management, human resource management, and other management disciplines. Some companies are already redefining strategic positioning around a shared value mindset.

Aligning strategic positioning with shared value opens up fundamentally new ways of thinking  about the business. Shared value opens up a new and far broader opportunity set for companies. Companies that create shared value will gain competitive advantages and superior performance. Finally, it's important to mention here that Shared Value is not about triple bottom line. 

Ericsson's Networked Society vision, a great opportunity for redefining the 'Economic Value' ?

In recent years business has been viewed as a major cause of social, environmental, and economic problems. The simple act of profit maximization was good in itself; what was good for business was good for society. We have seen the effect of business practices on healthcare, environment, the mortgage crisis; example after example where a whole society has been dramatically hit and left traumatized.
Profit is not inconsistent with society needs, but there is an increasing belief that this profit is made at the expense of the society.

In 2010, The World Health Organization has spent 5BUSD to deliver healthcare solutions to the world. The same year, a global corporation has spent 25BUSD to deliver potato chips to the world. Corporations are incredibly powerful at delivering solutions to problems but they make absolutely no value judgment about which problems they’re going to solve.

Ericsson picture

The Ericsson's Networked Society, through its wider and broader impact on the business landscape, leading to business transformation, industry shift and disruptive innovations, could be a tremendous opportunity for a new business practice that creates simultaneously economic and societal value.

It only takes 5USD to help a woman in a small village to start her own business, begin the process of learning to read and receive basic healthcare services.

It has never been so easy and so ‘cheap’ to startup a new business. Through the increasing number of connected devices, combined with a performing mobile broadband infrastructure and cloud technology, a large number of data and information is available for processing. To prevent disasters, fight poverty, empower women in poor countries. The sky really is the limit for sustainable business innovations that definitely generate profits for shareholders and at the same time create thick societal value.

I truly believe that this Networked Society vision can be a driver of economic growth and societal development in this all communicating world…

Smartphones & Mobile Broadband: a powerful combination for Business Innovations

Control your blood alcohol BREATHALYzER with YOUR SMARTPHONE!

photos: AndroMC

Technology - The solution consists of a small reusable box to connect to an iPhone or an Android smartphone with an app.

In France since July 1, it is mandatory to have a breathalyzer (Alcohol tester) in his car. Car drivers have the choice between two alternatives: the disposable one of 2 euros or an electronic device priced more than 100 euros now. It will be much cheaper with larger sales volumes.

AndroMC Systems has worked on a solution associated with a smartphone, which is widely used in France. This company has developed the B-test, a breathalyzer that plugs into an IOS or Android smartphone, and it is associated with an application.

The principle is simple: you plug the reusable housing on the charging port and blow in it and the app indicates whether you are fit to drive. If not, the app may even find another means of transportation in the neighborhood, or call a cab for you. This product has been awarded prevention label by a big insurance company. But to be legal, it must receive approval from the state. If this happens, it will be launched at the end of the year.

The combination of smartphone and Mobile broadband connectivity is becoming a driver of new business innovations, that will lead to economic growth, social empowerment and without any doubt to many surprising disruptions.

If you don't disrupt yourself, you will be disrupted!!

Products find a certain market only when they help customers get done the jobs that they already have been trying to do

"Marketers should think less about market segments and more about the jobs customers want to do..." 

This is what Harvard Professor Clayton Christensen affirms! Does it ring any bell to you? Do you have to go back to college and check all the marketing material again? No, you don't.
This idea of understanding the job-to-be-done by the customer rather than the customer himself comes from results of research conducted by Clayton.

"The idea that we should focus on understanding the customer and give the customer what she needs actually contributes to the failure of new innovations. The unit of analysis in coming up with great ideas are the jobs that are sitting out there needing to get done for which our products or services might get hired"


"Products find a certain market only when they help customers get done the jobs that they already have been trying to do"

Listen to Clayton Christensen Milkshake example:

 "I wonder what job people hire a milkshake to do for them..."
"...it turns out that the competitor is not Burger King milkshakes but bananas, donuts, bagels, and snickers bars"

What are the personality traits of top sales people?

Steve W. Martin presents in his recent HBR blog interesting findings from the results of personality tests he presented to high technology and business services salespeople as part of sales strategy workshops he has conducted. Below, I have summarized and copied the main key personality attributes of top salespeople and the impact of the trait on their selling style.

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1. Modesty. 91% of top salespeople had medium to high scores of modesty and humility.
Selling Style Impact: Team Orientation. top salespeople position the team. You dont have to be arrogant and selfish to be a top sales person

2. Conscientiousness. 85% percent of top salespeople had high levels of conscientiousness. Have a strong sense of duty.
Selling Style Impact: Account Control. Top salespeople take command of the sales cycle process.

3. Achievement Orientation. 84% of the top performers are fixated on achieving goals.
Selling Style Impact: Political Orientation.They strategize about the people they are selling to and how the products they're selling fit into the organization instead of focusing on the functionality of the products themselves.

4. Curiosity. 82% of top salespeople scored extremely high curiosity levels.
Selling Style Impact: Inquisitiveness. An active presence drives the salesperson to ask customers difficult questions.

5. Lack of Gregariousness. Top performers averaged 30% lower gregariousness than below average performers.

Selling Style Impact: Dominance. Dominance is the ability to gain the willing obedience of customers such that the salesperson's recommendations and advice are followed.

6. Lack of Discouragement. Less than 10% of top salespeople were classified as having high levels of discouragement.

Selling Style Impact: Competitiveness. Top performers are able to handle emotional disappointments, bounce back from losses.

7. Lack of Self-Consciousness. Less than 5% of top performers had high levels of self-consciousness.

Selling Style Impact: Aggressiveness. Top salespeople are comfortable fighting for their cause, action-oriented and unafraid.

Reference: Steve W. Martin teaches sales strategy at the USC Marshall School of Business. His latest book on sales linguistics is Heavy Hitter Sales Psychology: How to Penetrate the C-level Executive Suite and Convince Company Leaders to Buy.